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The Future of Gas and Convenience Retailing

As another year passes, a review of emerging patterns in the gas and convenience retailing world reveals a trend that we believe provides a view into the future of the industry. With the consolidation of mega brands, for example the recent Couche Tard chain globally rebranding under the Circle K moniker, the recent divestiture of convenience store business by Esso (and the similar approach taken by BP less than a decade ago), we start to see a common theme​

As further evidence of an uptick in this trend, Kroger announced they are considering selling their gas and convenience business, while 7-Eleven is offering outsourced convenience retailing services to petroleum companies who are considering exiting their back court business at their gas stations. Add the adoption of driverless and electric cars picking up momentum and you have a new set of dynamics. However, even with consolidation and divestiture being de rigour, we have identified several other factors we believe will have significant impact on the future of the industry.

People still matter

People have craved the independence automobile provides for more than a century, and we do not see this changing any time soon. Irrespective of whether we are in a driverless car or one powered by electricity or hydrogen, people will still want to travel long distances for holidays, to visit family or take weekend trip to their cottages, the beach, or another nearby destination. With any long trip they will need a rest stop, food and beverages, in addition to the natural body break. Technology will continue to evolve in eliminating friction points in travel but will not remove our human needs for independence and mobility.

Hollowing out of inner city stations

The relevance of highway stations will allow networks to thrive while we see a significant change in the number of convenience retail locations within urban communities. As the reliance on petrol becomes less vital to consumers, this will force many city stations to close. The rising real estate value of city stations and urban population increase will add further reason for location to be sold to developers for condo or office buildings featuring electrical charging stations.

Electric versus hydrogen debate ends

A key value of current gas and convenience stores is the traffic petrol brings them as part of driving convenience store sales. We foresee the debate between hydrogen and electric coming to an end, because hydrogen is very expensive to produce, leaving the more efficient, and less expensive option to win the day. Once that happens we see a growing business for the management and recycling of electric car power cell units that have expired.

Convenience reinvented

In spite of all of these changes occurring, consumers will continue to crave snacks, food and beverages, and smart convenience operators will refocus their attention on building food service brands that rival the largest fast food chains. We have started to witness this shift with many U.S. operators such as Sheetz, Wawa and 7-Eleven building strong franchises in food service offerings. As more customers shift towards environmentally friendlier vehicles we foresee the same dynamic shift occurring in the back-court convenience store experience. Technology will automate the food service experience removing human error and long wait times while reducing the retailers operational cost by reducing the staffing levels.

As the old saying goes, change is great as long as the change is happening to someone else. For the gas and convenience retail industry, change has always been a constant as customer living and travel patterns shift, driving different needs and aspirations. It will be interesting to see how the industry reinvents itself in response to the growing shift towards new forms of transportation.

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